Clements is math-challenged (and wrong).While technically true, the initial tax savings usually ends up paying for the taxes in the end. Assuming constant tax rates before and after retirement, the growth is effectively tax free. If taxes are lower in retirement, the result is even better than tax-free growth — better than a Roth in other words. (Very high net worth individuals might still need to consider the tax consequences more carefully. For most of us, however, the tax ramifications are simpler to manage.)The growth (and the contribution) are not tax-free. They are just tax-deferred.The benefits outlined:
— Tax-free growth—or better.
As the account value grows, so does Uncle Sam's share of it. Eventually, he wants his share.
Jonathan Clements runs through the math here: Paying for Itself.
Our Wiki does, too: Traditional versus Roth/Calculations
Statistics: Posted by Big Dog — Sun Jan 28, 2024 12:17 am — Replies 42 — Views 2393